This new paper comprehensively reviews the core components of payment reform as well as findings from Harold Miller’s work around the country.
The following is the outline of the paper click below to read it.
I. INTRODUCTION: THE NEED FOR TRANSITIONAL PAYMENT REFORMS ………. 1
A. The Barriers to High Quality, Affordable Care Posed By Current Payment Systems ……………………………………. 1
B. The Problems With Many Payment Reform Proposals……………………………………………………………………………… 1
C. The Need for Transitional Payment Reforms …………………………………………………………………………………………… 2
II. PAYMENT REFORMS TO SUPPORT ACCOUNTABLE ACUTE CARE ………………… 4
A. Paying Hospitals on a Case Rate Basis for All Patients ……………………………………………………………………………… 5
B. Paying All Physicians on a Case Rate Basis for Acute Care Episodes …………………………………………………………. 5
C. Bundling Payments to Hospitals and Physicians ……………………………………………………………………………………… 6
D. Providing an Inpatient Warranty ……………………………………………………………………………………………………………. 7
E. Bundling Payments for Inpatient and Post-Acute Care …………………………………………………………………………….. 9
F. Providing a Warranty for Post-Discharge Complications and Readmissions ……………………………………………… 10
G. Paying Based on Diagnosis Instead of Treatment …………………………………………………………………………………….. 11
H. Targeting Payment Reforms to Facilitate the Transition …………………………………………………………………………… 11
III. PAYMENT REFORMS TO SUPPORT ACCOUNTABLE MEDICAL HOMES AND SPECIALTY CARE …………………………………………………………………………………… 13
A. Care Management Payments and Utilization-Based Performance Incentives for Primary Care …………………… 13
B. Care Management Payments for Specialists …………………………………………………………………………………………….. 15
C. Condition-Specific Partial Comprehensive Care Payment ………………………………………………………………………… 16
D. Moving From Condition-Specific Payment to Global Payment………………………………………………………………….. 18
IV. SETTING PRICES, MANAGING RISK, AND ENSURING QUALITY …………………… 19
A. Setting Prices ………………………………………………………………………………………………………………………………………. 19
B. Limiting Financial Risk for Providers ……………………………………………………………………………………………………… 21
C. Ensuring the Quality of Care ………………………………………………………………………………………………………………… 25
D. Special Challenges for Small Providers ……………………………………………………………………………………………………. 26
V. DEVELOPING A TRANSITION STRATEGY ………………………………………………….. 28
A. Choosing a Starting Point …………………………………………………………………………………………………………………….. 28
B. Keeping the End in Sight ……………………………………………………………………………………………………………………… 29
C. Examples of Multi-Step Transitions ……………………………………………………………………………………………………….. 30
D. Creating Successful Accountable Care Organizations ……………………………………………………………………………….. 32
VI. OBTAINING SUPPORT FROM PAYERS ………………………………………………………. 34
A. The Myth of the One-Size-Fits-All Payment Reform ………………………………………………………………………………… 34
B. Aligning the Payment Systems of Multiple Payers ……………………………………………………………………………………. 34
C. How Medicare Can Participate ……………………………………………………………………………………………………………….
Larry DeGhetaldi M.D. President of the Palo Alto Medical Foundation in Santa Cruz California has been studying part A and B 2008 Medicare data by county and has found some very interesting results in Wisconsin.
Dr. DeGhetaldi has recently testified at the Institute of Medicine (I.O.M.) on the issue of variation in medical costs. He has risk adjusted(using CMS risk adjustment methodology) the Medicare claims data from 2008 and compared county by county performance for every state. This means healthcare providers cannot argue they have sicker patients. His analysis in Wisconsin shows wide variation in costs per county which can be viewed by clicking on the first link below. A color coded map is also included, green being high performing counties and red being low performing which is found on the second link.
This analysis shows the two lowest cost counties in Wisconsin for Medicare expenditures are LaCrosse and Outagamie(Appleton). Both of these counties are served by Healthcare Value Leaders members Gunderson Lutheran and Thedacare respectively. Both of these organizations have been focused on taking waste out of care processes for years and both have had community wide initiatives regarding end of life care.
What is compelling for America is the result listed at the third link below. This shows national expenditures in comparison with expenditures in Outagamie county where ThedaCare is the market share leader found on the third link below. If U.S. Medicare expenditure could be reduced to the level of Outagamie county a savings of $57 billion dollars per year could be achieved.
Both Gunderson and ThedaCare have been quite willing to share their successes with the rest of the country by conducting site visits, testifying to the I.O.M and to Congress, publishing peer reviewed journal articles as well as books such as On the Mend. We’ve done our part, the question is when are the high cost providers going to do theirs?
The Medicare data files have been locked in a box for 30 years. Now News Corp. the owner of the WSJ wants to break the box open.
The Center has proven that transparency of healthcare performance data is necessary to improve the way doctors and hospitals deliver care. This interesting twist from a newspaper may be the straw that breaks the camel’s back?
The publisher of The Wall Street Journal filed suit Tuesday to overturn a decades-long court order barring public access to a confidential Medicare database it says is essential to rooting out fraud and abuse in the government health-care program.
The American Medical Association, the doctors’ trade group, successfully sued the government in 1979 to keep secret how much money individual doctors receive from Medicare, and the ruling still stands.
The filing by Dow Jones & Co., in the U.S. District Court for the Middle District of Florida, comes after a series of articles in the Journal about abuses of the Medicare system. The articles were based on computerized Medicare records that represent part of the broader database at the center of the 1979 case.
Soaring Medicare costs threaten to overwhelm the federal budget, yet American taxpayers are blocked from seeing exactly where their money goes. Under a three-decade-old court order, Medicare can’t publish the billings of individual physicians who participate in the program. In this series, The Wall Street Journal explores Medicare’s vast databases and shows how they can be used to expose potential fraud and waste.
Dow Jones, owned by News Corp., claims the 1979 injunction hampered the paper’s reporting since it limited its access to the data and its ability to name physicians and other providers. Dow Jones says the effort won’t violate patient confidentiality. “It’s time to overturn an injunction that, for decades, has allowed some doctors to defraud Medicare free from public scrutiny,” Dow Jones general counsel Mark Jackson said in a statement.
The AMA withstood at least two attempts to reverse the injunction in 2009. In one case, the U.S. Court of Appeals for the District of Columbia ruled that under the Freedom of Information Act, physicians’ privacy interest outweighed the public interest in knowing how much doctors were collecting from Medicare.
In a statement, AMA President Cecil B. Wilson said, “Physicians, like all Americans, have the right to privacy and due process, and should not suffer the consequences of having false or misleading conclusions drawn from complex Medicare data that has significant limitations.” He added that doctors who care for Medicare patients already are subject to significant oversight.
A spokeswoman for the U.S. Department of Health and Human Services, which houses the Centers for Medicare and Medicaid Services, said the department wouldn’t comment while the suit is being reviewed.
Health-care advocates, law-enforcement officials and others have argued that access to the data would have a range of benefits, such as exposing instances of fraud, easing evaluations of the quality and cost of care, and helping to ensure the government is doing everything it can to protect taxpayer funds.
“The Medicare system is funded by taxpayers, and yet taxpayers are blocked from seeing how their money is spent,” said Robert Thomson, editor-in-chief of The Wall Street Journal. “It is in the interest of law-abiding practitioners that those who are gaming the system are exposed. Unless funds are used efficiently and intelligently, the health of the nation, physically and fiscally, will be undermined.”
Another peer reviewed journal article on the power of the lean methodology in healthcare.
I’ve known Patty Gabow, the CEO of Denver Health, since she initiated her lean journey at Denver Health. This article describing the results at Denver Health is more confirmation that lean works in healthcare. In this case it’s in a safety net hospital with limited resources. In fact, what we are finding is it works in any setting,in any organizational structure,and in any country no matter what the payment system.
Last week the Wisconsin Collaborative for Healthcare Quality (WCHQ) initiated a consumer web site.This website utilizes WCHQ data on Wisconsin doctors to help guide patients.Using an easy to understand conversational style they begin to understand doctor quality
The WCHQ has been working with RWJ as a member of the aligning forces for quality project (http://www.forces4quality.org/welcome). The focus of this project has been to deliver clearly understandable data to patients on the quality of care they can and are receiving in the doctors office and hospital. At www.wisconsinhealthreports.org, the healthcare performance information is presented for Bob and Helen who are the Wisconsin patients figuring out how to use the data to improve their chronic disease care.WCHQ has been publicly reporting physician performance data for the last 8 years and now is able to present this data in a way patients can begin to understand. The following Milwaukee Journal Sentinel article describes the work – http://www.jsonline.com/business/112982334.html
The Institute of Medicine sponsored a meeting of national leaders on June 7th in Washington. The distinguished audience heard from Peter Lee the HHS Health Reform Director and Rick Gilfillan the Center for Medicare and Medicaid Innovation.Peter Lee outlines the changes coming to support value
Peter Lee outlined a series of “value” incentives that Medicare has planned for the next 4 years There are new incentives for physicians which include: 1. A 10% increase for primary fee for service rates between 2011 and 2015. Also fee for service medicaid payments for medicaid patients will increase to the medicare rate. 2.There is another 1% increase in payment from 1-2% for physicians to report their quality data to PQRI. In subsequent years there will be a penalty for those physicians that don’t report. 3.There is over 4 billion dollars allotted to pay physicians who comply with new meaningful use guidelines for medical record use.
For Hospitals 1. In 2011 4% of hospital reimbursement will be based on quality and cost incentives implemented by medicare and by 2015 up to 9% of hospital medicare reimbursement will be related to cost and quality incentives including meeting quality reporting and meaningful use guidelines.. 2. There will be penalties as well which will be applied if hospital acquired conditions and “excessive”readmission rates occur.
The following press release describes what CMS released yesterday for hospital payments.
CMS Releases Value-Based Purchasing Incentive Plan
Cheryl Clark, for HealthLeaders Media , January 11, 2011
Federal officials have issued a long-awaited proposal on how they will make value-based purchasing incentives. The document sets forth which metrics will generate payment after Oct. 1, 2012.
The Centers for Medicare & Medicaid Services proposal, issued late Friday, incorporates 17 clinical process-of-care measures used in five health categories, acute myocardial infarction, heart failure, pneumonia, healthcare associated infections and surgical care improvement. It also will use eight measures from the hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey that reflects how patients view their care experiences.
Those measures include patients’ views of their communication with nurses and doctors, the responsiveness of hospital staff, their pain management and the cleanliness and quietness of the hospital environment.
These 25 measures will be used to generate FY 2013 DRG payments.
By 2014, it will add mortality outcome measures for the three health conditions, eight hospital-acquired condition measures and nine Agency for Healthcare Research and Quality measures. The hospital-acquired condition measures include surgical foreign object retention, air embolism, blood incompatibility, pressure ulcer stages III and IV, falls and trauma such as burns or electrical shocks, catheter-associated urinary tract infections and manifestations of poor glycemic control.
The regulations will apply to discharges at 3,000 acute care hospitals. All these hospitals will have their funding reduced starting with 1% in fiscal year 2013, rising to 2% by FY 2017, but will have a chance to earn that money back, and perhaps more, under the incentives algorithm.
Algorithms will be calculated to derive a Total Performance Score or TPS for each hospital.
CMS director Don Berwick, in a statement, called the proposed regulations “a huge leap forward in improving the quality and safety of America’s hospitals for both Medicare beneficiaries and all Americans.
The hospital value-based purchasing program will reward hospitals for improving patients’ experiences of care, while making care safer by reducing medical mistakes.”
Senior Associate Directors for Policy for the American Hospital Association, Beth Feldpush and Joanna Kim, say that while their organization supports the guidelines, one element sticks out they believe unfairly penalizes hospitals.
Under the proposal, hospital-acquired conditions are included in the algorithm that would result in financial penalties to a hospital that had higher percentages. That’s a problem because another section of the Patient Protection and Affordable Care Act also includes specific financial penalties for hospitals with higher rates of hospital-acquired infections.
“We were surprised to see HAI in the value based purchasing rules, and this is something the AHA will be strongly opposing,” Feldpush says. If this is allowed to stand, “hospitals will be at risk for double jeopardy, with financial penalties imposed twice on the same set of measures.”
Kim and Feldpush say the AHA is studying other parts of the proposal in order to give a more detailed response. So far, they say, “There’s a lot in here that we really do like,” and that these financial incentives, “will lift all boats.”
Hospitals will learn what their value-based incentive payment will be for FY 2013 “at least 60 days prior to Oct. 1, 2012,” CMS said. The period of evaluation begins this July 1 and lasts until March 31, 2012.
Several other parts of proposed regulations clarify how the algorithm will work. For example, hospitals will benefit not only if they have high scores, but also if they show improvement.
CMS proposes to use a linear improvement equation, so that each percentage of improvement will count the same. It had been suggested that some hospitals might get greater rewards if they improved from very low scores, or if they achieved improvement from almost perfect to perfect.
Blair Childs, senior vice president of public affairs for Premier healthcare alliance, said the rules “will evolve the Medicare payment system to reward improvements in quality and health outcomes.”
Through its five-year Hospital Quality Incentive Demonstration pilot project with CMS, Premier says, incentives like these “can achieve better outcomes for patients. In five years, participants in the HQID raised their overall quality by an average of 18.3%.”
For the most part business has taken a back seat in the health reform debate. Now they are making decisions that may have more impact on what really happens with healthcare reform than anything the federal government
can or will do.
I had the privilege of spending the day with a number of high profile people from around the country who are committed to changing the way we pay for healthcare to focus on rewarding value. On January 7th the Institute of Medicine sponsored a day long program entitled Value Incentives in Healthcare. The attendees included employers such as the Paul Grundy M.D. Global director of healthcare for IBM who has been implementing primary care medical home contracts around the U.S. in markets where IBM does business. We also heard from Ginny Proestakes R.N. who is director of health benefits at G.E. These companies are beginning to determine where they do business based on the healthcare costs in certain markets. Dr. Grundy indicated IBM had just chosen Dubuque Iowa to open a new IBM business unit because medical care there was more than 50% less than a similar market they had been considering on the east coast.
The message from these employers was loud and clear: We are taking charge of our healthcare costs and if the providers aren’t willing to commit to lowering costs then we will take our business somewhere else. Ofcourse employers have been moving jobs to lower cost labor markets for years but that meant moving jobs from the U.S. to a different country. In this case, these executives from business are suggesting moving jobs to lower cost markets in the U.S. Imagine the pressure this starts to put on communities if business gets serious about moving to lower cost healthcare markets.
Elsewhere on this blog we have shown the radical difference in healthcare cost between the east coast and Florida markets vs. Appleton Wisconsin. Applying the Dartmouth Atlas Data there is as much as a two and half fold difference in cost between Miami and Appleton with Miami being more expensive. It is refreshing to see American business begin to acknowledge markets that are more efficient and delivering better value by sending their business there. If more businesses would consider these types of moves a sense of urgency could be created which would motivate providers to change.
ThedaCare has been on the lean journey for years and has been delivering better value to patients as evidenced by public reports of performance at www.wchq.org. Despite clear evidence of superior performance the payment system is not rewarding this improved value.
The following paper was written to educate CMS officials as well as employers and insurance company leaders to the problems associated with the current payment system. If we are to create an environment where better healthcare value can thrive the problems identified in this detailed report must be overcome.
David Cutler et. al. makes some very important points in this article regarding the need to create competition and not allow the ACO to become a completely hospital dominated phenomenon.
On this blog in the last year we have made similar points including that the ACO should be focused more on delivering better value to patients by considering the entire patient condition and including the cost and quality outcome measures related to the condition vs. simply creating a new structure that can’t deliver anything in the way of improved value. Part of this challenge is to be able to actually measure value. Since value metrics don’t exist yet, how will we know if one ACO is performing better than another?
I will be at the IOM’s Value Incentives meeting this week. ThedaCare has just completed a full review of the penalties Medicare applies to it’s collaborative Care Unit for delivering higher quality lower cost care. That paper will be included in the Value Incentives materials sent to all participants. It will also be the subject of a follow-up blog this week which will include the paper.
The following New York Times article points out the difficulty in writing the law that will govern the new health reform legislation concerning Accountable Care Organizations.
I have been involved in a number of national initiatives trying to define the ACO concept. One of the efforts from NCQA released an 80 page document a couple of weeks ago which describes the thinking of a number of physicians, administrators and academics on the structure of the ACO. Unfortunately, as we define the structure of the ACO and how to accredit it we may be losing sight of the actual purpose for which it exists in the new law.
That purpose is to deliver more coordinated better quality lower cost care. The focus needs to be on the patient experience as the driver for design not how many hospitals or physicians can merge together. When we focus only on structure and finances we lose the power of what the ACO can really be. It is very disturbing the push to consolidate going on throughout the country. In my experience consolidation if not done for the right purpose does not lead to good things for the customer in this case the patient.
I could not agree more with Dr. Berwick’s quote in the New York Times article. Here’s the excerpt.
Dr. Donald M. Berwick, the administrator of the Centers for Medicare and Medicaid Services, hails the benefits of “integrated care.” But, Dr. Berwick said, “we need to assure both patients and society at large that destructive, exploitative and costly forms of collusion and monopolistic behaviors do not emerge and thrive, disguised as cooperation.”
